YPN "Beta" Shuttered; Customers Directed to Chitika

-- Yahoo logo on its back - Illustration --Yahoo's Adsense clone, otherwise known as YPN (Yahoo! Publisher Network), has been officially shuttered by the company.

This is just another chapter in Yahoo's slow and steady march into irrelevance and mediocrity. How could a company that had SO much going for it at one time have messed things up so severely? How does Yahoo! swing and miss so often? How does Yahoo! only have a market cap of a little over $23 billion?

Google Adsense has made GOOG an absolute fortune. If you publish a web site, then all you have to do is cut and paste a few lines of code on to your site and you are making money. Google Adsense will figure out what each page is about and serve ads that are relevant to the content. Adsense is used on literally millions of sites across the world, just because it is so easy to use.

When Yahoo! announced that they would be launching their Publisher Network, publishers and YHOO shareholders rejoiced. Competition for Google would be a good thing, publishers thought. In addition, a successful YPN would do wonders for Yahoo's bottom line, as Adsense supplies a never-ending fountain of cash to Google. Yahoo presumably had the brain power and, most importantly, the advertisers to successfully implement their publisher network.

However, YPN was plagued with problems and never exited the "beta" stage. Based on reactions from across the web today, many people point to the fact that Yahoo could never really figure how how to properly target ads as the main reason behind YPN's downfall.

Given YPN's profit potential, however, it seems ridiculous to me that the company wouldn't spend more money and time on making it work. The potential is just overwhelming, just based on how much money Google makes from their Adsense program.

I'm not sure what Yahoo! is doing these days. What's their long-term strategy? To give up on a promising project such as YPN makes me think that Yahoo! is basically just throwing in the towel at this point. Shareholders surely can't be happy with the lack of direction and performance - Yahoo's shares have been meandering around in the $14-$17 range for the past year. Carol Bartz has been CEO of the company for a little over a year, and you have to ask the question - what has she accomplished so far? Has she spelled out her long-term vision for the company? If so, what is it?

Sure, Yahoo! is a $23 billion company. However, there is just so much wasted potential there. Yahoo! should be battling it out with Google - instead, that war ended a long time ago (Google, by the way, has a market cap of over $180 billion).

Just think - Microsoft was making an aggressive push to purchase Yahoo! just two years ago. In a last ditch effort to acquire Yahoo!, Microsoft raised its bid for the company to $33 per share. Jerry Yang, acting CEO of Yahoo! at the time (and one of its co-founders), demanded $37 per share. Microsoft walked away from the deal, and Yahoo! tanked.

Instead of resting comfortably in the arms of Microsoft, Yahoo! decided to play hardball and has been struggling ever since. I wonder if Jerry Yang would reject a $33 per share price now, especially given all of the grief that he has received after the deal fell apart?

Back to Yahoo. You have to wonder how long investors are going to remain in the stock if things don't begin to turn around, and quickly. Seven of the top 22 hedge funds that we currently track own sizable stakes in Yahoo! common shares, but for how long? Maybe they were convinced to remain in their positions due to Carol Bartz taking over as CEO. Maybe they know something that I don't, but it seems to me like Yahoo! is slowly going down the toilet, and I wouldn't be surprised to see many funds start to bail going forward.

So much wasted potential here - you have to wonder if Yahoo! will EVER turn it around, or if they'll just slowly disassemble themselves and fade away into oblivion.

Filed under: General Market News

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